Jobs Focus for Regulations

President Barack Obama is expected to use his jobs speech to Congress on Thursday to blunt business and Republican criticism that his administration is engaged in regulatory overreach.

In the run-up to the speech, Mr. Obama on Friday abandoned a proposed Environmental Protection Agency rule tightening air-quality standards. The administration also says a regulatory review will save businesses more than $10 billion over five years, and it eased offshore drilling restrictions in the Gulf of Mexico and Alaska.

ENLARGE

President Obama spoke on Labor Day to a union audience outside General Motors' headquarters in Detroit.
Agence France-Presse/Getty Images

But the president's pushback has limits. Last week, for example, the federal government sued to block
AT&T
Corp.
from acquiring wireless carrier T-Mobile USA and filed suit against 17 of the world's biggest financial institutions for not adequately disclosing the risks of home loans they sold. The White House also isn't backing away from the Dodd-Frank financial-regulatory overhaul and the health care law.

Mr. Obama applauded the new financial regulations in a Labor Day speech in Detroit, saying "working folks shouldn't be taken advantage of—so we passed tough financial reform." And he touted a new law to stop pay discrimination and regulations to promote worker safety.

Mr. Obama may also talk Thursday about giving industry more time to comply with other regulations, including environmental rules that businesses have complained are coming too quickly, according to people familiar with the matter.

Mr. Obama has made an effort to appeal to business in the second half of his first term after two initial years of frayed relations. The political goal is to show that Mr. Obama is pro-regulation on some key fronts, but is generally friendly to business.

The U.S. Chamber of Commerce and the Business Roundtable have accused the White House of undercutting the economic recovery by imposing new and onerous regulations.

Republicans in Congress say they are causing businesses to delay investments and hiring. On Friday, Senate Minority Leader Mitch McConnell (R., Ky.) said the president's reversal on the air-quality rule "alone will prevent more job losses than any speech the president has given."

Mr. Obama personally said he would jettison the EPA rule that would have reduced smog-forming ozone levels. He said the EPA would consider the rule again in 2013. The decision came after an aggressive industry-led push to oppose the rule, which the EPA estimated would cost as much as $90 billion per year. Chief of Staff William Daley, who was brought in to help smooth relations with business, and Cass Sunstein, who heads the Office of Information and Regulatory Affairs, are said to have been sympathetic to the industry point of view that the rule was unnecessary and could impose too many costs in the midst of a struggling economy, according to people familiar with the matter. Central to their thinking was that EPA is to reconsider ozone standards again in 2013. EPA Administrator Lisa Jackson, who proposed the tighter standard, pushed for its implementation.

Mr. Obama's decision infuriated many Democrats and environmental groups, who say he sided with polluters over public health. But White House officials say the president has come to agree that regulations such as the EPA rule hurt job growth. Industry-funded studies said the rule would cost millions of jobs.

On a call Friday with supporters of the rule, a White House official said the EPA is "under unprecedented assault right now" and that Republicans have made the agency "the focus of their efforts." The official referenced a letter from House Majority Leader Eric Cantor of Virginia to GOP members vowing to fight 10 "job-destroying regulations" including seven EPA rules. Some Republican presidential candidates have talked about shuttering the EPA, a line that often draws applause.

Jared Bernstein, the former top economic adviser to Vice President Joe Biden now at the Center on Budget and Policy Priorities, said Mr. Obama's decision on ozone had little to do with creating jobs. "The president is correctly committed to getting rid of outdated and harmful regulations. But to tie it to jobs and economic growth is misguided," he said

In other areas, such as antitrust, the administration has had to juggle the competing demands. In 2009, Mr. Obama vowed to "reinvigorate" antitrust enforcement. Since then, the Obama Justice Department has trod a careful middle path. The administration recently stepped-up challenges to mergers, including
Nasdaq OMX Group
's
offer for
NYSE Euronext
.
Even so, it has disappointed some who thought it would more consistently place the interests of consumers above those of big business.The administration has also resisted efforts to unwind financial rules put in place to prevent a repeat of the 2008 financial crisis. Business groups and Republicans have attacked the rules as onerous but the administration has so far defended the Dodd-Frank law and continued to call for swift implementation.

"The Obama administration has certainly been more aggressive in its merger enforcement than Bush 43," said
Melissa Maxman,
an antitrust lawyer at Cozen O'Connor law firm in Washington. "But it's come under criticism from consumer and antitrust groups for not being as aggressive as it had promised."

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